Texas has trade opportunities in Russia

Updated 8:00 pm, Friday, July 6, 2012

Is the Cold War over yet?

The matter should be nailed shut into the past tense when Russia joins the World Trade Organization this summer. If Congress reciprocates, Texas should at the front of the line of U.S. states trading with Russia.

Russia is the largest nation in the world that is not a WTO member. Its application has been pending since the mid-1990s, but a WTO invitation to join did not happen until December.

Russia's entry won't be as momentous as China's WTO membership in 2002. But Russia has grown up economically in a dramatic way since the Soviet Union disbanded.

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In 1994, Russia was the world's 16th-largest economy and only 4 percent the size of the U.S. economy. Per capita gross domestic product was only $1,865. Today, Russia is the seventh-largest economy. Its per capita GDP is nearly $13,000. Russia's population, now about 142 million, declined over the intervening years but recently reversed the trend.

Russia's parliament, facing a July 23 deadline for its WTO invitation, is scheduled to vote Tuesday to join the WTO. Once the agreement is ratified, Russia automatically joins the WTO 30 days later.

However, for U.S. companies to trade competitively with Russia, Congress must sweep away some outdated Cold War restrictions and grant “permanent normal trade relations” status to Russia. A PNTR bill sponsored by Sen. Max Baucus, D-Mont., is pending.

Granting PNTR trade status “is not a gift to Russia,” Kirk stressed in recent congressional testimony. Russia would have to lower tariffs, agree to protect foreign brands and copyrights, enforce food safety standards and conduct rules-based dispute resolution. The United States would not make any trade concessions because its tariffs already are low.

Despite its concessions, Russia wants WTO membership because it believes it will attract additional foreign investments that can diversify and strengthen its economy.

Alexander Turkov, a Russian delegation member visiting San Antonio on Friday to explore economic diversification at the city level, said his country is divided over the WTO entry. Large businesses and government agencies favor the entry, but small businesses fear lower tariffs will hurt them, Turkov said through a translator during a visit to the Greater San Antonio Chamber of Commerce.

“The government's task will be to weight the opposing views and protect the small producers,” said Turkov, a scientist and project manager at a government-run financial university in Moscow. “On the plus side, we know that foreign markets will open for us.”

Texas has much in common with Russia, including sharing a history of successfully repelling large military invasions. Both Texas and Russia are big in agriculture, military equipment construction and energy exports.

In 2011, Texas exported $1.6 billion worth of goods to Russia, supporting about 4,100 jobs, according to the Washington-based Business Roundtable, which is lobbying for normal trade relations. Shintech Inc. in Houston exported plastics to Russia. Choice Trailer Manufacturing in Katy has exported trailers. TMK-IPSCO in Baytown is a subsidiary of a Russian pipe manufacturer.

Without normal trade relations, “Our foreign competitors — but not the United States — will be able to use WTO mechanisms to enforce Russia's commitments for their companies and workers,” a Business Roundtable report states.

Texas could compete better in selling beef to Russia, for example. In 2011, 4 percent of Russia's beef imports came from the United States while 70 percent came from Brazil, Uruguay and Paraguay.

Texas companies should push Congress for normalized trade relations with Russia. Texas companies understand international trade better than anyone, and Russia is poised to be a solid customer.